I spent years watching clients damage their credit scores while faithfully following advice they’d picked up from well-meaning family members, Reddit threads, and half-remembered conversations. Most of it was wrong.
Credit scores are genuinely confusing — there are dozens of different versions, the calculation isn’t transparent, and the myths have been circulating long enough that many people treat them as common knowledge. Let’s fix five of the worst ones.
Myth 1: Carrying a Balance Builds Your Credit
The myth: You need to carry a small balance on your credit cards to show lenders you’re using credit responsibly.
The reality: This is completely false — and expensive. Carrying a balance does nothing to improve your score. What matters to FICO is whether you’re using your card (which results in a reported balance) and whether you’re paying on time. You can achieve both by using your card for everyday purchases and paying the full statement balance each month.
Practical takeaway: Pay your full balance every month. You’ll avoid every dollar of interest charges and your score will be just as good — often better, because paying in full keeps your utilization low.
Myth 2: Checking Your Own Credit Hurts Your Score
The myth: Every time you look at your credit score or pull your credit report, it damages your score.
The reality: Checking your own credit is a “soft inquiry” and has absolutely zero effect on your score. The type of inquiry that can affect your score is a “hard inquiry” — which happens when a lender pulls your credit because you’ve applied for new credit (a loan, credit card, or mortgage). Soft inquiries include your own checks, pre-approval checks from companies offering you credit, and employer background checks.
Practical takeaway: Check your credit score and report frequently. You should review your full credit report at least once a year at AnnualCreditReport.com. Catching errors early can save you real money — errors on credit reports are surprisingly common.
Myth 3: Closing Old Credit Cards Helps Your Score
The myth: Getting rid of old, unused credit cards cleans up your credit and improves your score.
The reality: Closing old accounts almost always hurts your score in two ways. First, it reduces your total available credit, which increases your credit utilization ratio (the percentage of available credit you’re using) — and high utilization is bad. Second, if it was your oldest account, closing it shortens your average account age, which is another factor in your score.
Practical takeaway: Keep your oldest cards open, even if you rarely use them. A small annual purchase (a streaming subscription, a tank of gas) keeps the account active. If an old card has an annual fee, you can call and ask to downgrade to a no-fee version of the same card — which keeps the account history intact.
Myth 4: You Have One Credit Score
The myth: There is a single “credit score” number that all lenders see when they check your credit.
The reality: You have dozens of credit scores — possibly hundreds. FICO, the most widely used scoring company, has over 60 different versions of its scoring models. Different lenders use different versions: a mortgage lender may use FICO 2, while a credit card issuer uses FICO 8, and an auto lender uses FICO Auto Score 8. On top of that, each of the three major credit bureaus (Equifax, Experian, and TransUnion) calculates scores separately, using slightly different data. Then there’s VantageScore, a competing scoring model developed by the bureaus, which uses the same underlying data but different weights and thresholds.
Practical takeaway: Don’t stress over seeing different score numbers in different places. Focus on the behaviors that improve scores across all models: paying on time, keeping utilization below 30% (ideally below 10%), not applying for new credit unnecessarily, and maintaining long-standing accounts.
Myth 5: Your Income Affects Your Credit Score
The myth: Having a higher income means a better credit score.
The reality: Your income is never a factor in any credit score calculation — not even a small one. Credit scores measure one thing: how you manage debt. The five factors in a standard FICO score are payment history (35%), amounts owed / utilization (30%), length of credit history (15%), credit mix (10%), and new credit inquiries (10%). Income, savings, net worth, and employment status don’t appear anywhere in that calculation.
Practical takeaway: A high earner who pays late has a worse score than a moderate earner who pays on time. What you earn doesn’t matter — what matters is what you do with what you borrow.
The good news is that once you understand what actually moves your score, improving it becomes much more straightforward. Pay on time, keep your balances low relative to your limits, and don’t open new accounts without a reason. That’s most of it.